Selling a property that’s owed by a trust takes a certain amount of planning and preparation. Below is some info that should help you be prepared. You can make it a smoother process by having the below steps taking ahead of time.
Trust document needs
Selling a property that’s owned by a trust, whether it’s your trust or your acting as the successor trustee, requires either the entire trust or a number of key sections if you do not want to send the whole trust. Best practice is to have the trust readily available before signing a listing agreement in case you need to show it to your broker. That said, you will be attesting that you have the right to sell the property so often you can wait and just supply the trust documents to the title company.
A bank account in the name of the Trust is required. Proceeds from any property sale may only be distributed to the property owner and in this case it’s the Trust. The Trustee of the trust can have the funds wired to the trust’s bank account, but otherwise a check would be made out to the trust. The account can be in any state. An out of country account would likely pose a problem so if you think that’s what might happen talk to the title company well before closing to make sure you’ll be able to receive your funds easily after closing and funding have occurred.
Required by Title in order to close:
Without the trust documents you cannot close. Best practice is to deliver a copy of them to the title company well before closing so they can look them over.
If the title requires the entire trust you can send it directly to the title company through a secure email program or you can bring them the hard copy if you don’t have it digitally. It will be returned to you once they’ve scanned all of the documents or at closing. And if you don’t feel comfortable parting with it, you might be able to wait for them to scan the documents and then take it back with you in the same visit. Be sure to let them know what so they have set aside the time and personnel to do that while you wait.
If the title company will allow you to provide just portions of the trust you’ll need at least the following:
- Cover page with date
- First few pages that “name” the trust
- Designation of successor trustee(s) if dealing with a successor trustee
- Pages that outline how it’s handled if one member of a joint trust passes (usually states the other takes over as sole trustee)
- Notarized signature pages at the end of the trust
You will also need to provide the Death certificates of any and all of the original trustees who have passed away if you’re acting as a survivor trustee.
Trustees cannot give someone a POA:
Trustees may not delegate their duties through a Power of Attorney form to another person. The Trustee must be the ones to sign all documents so if there’s any reason you would not be able to do that, tell your broker and the title company as soon as you know so arrangements can be made. You MAY sign with a notary if you live out of town from where the property is being sold but if you are going to be out of the country, a notary can take four or more WEEKS to arrange so make sure you plan for that well ahead of time. See the other post about “Closing out of the country” for more info.
Trust bank account needed:
Title companies will ONLY release funds to the person listed at the owner. Period. If the property is owned by a trust, the funds must go to a bank account in the name of a trust. You will need to open a bank account in the trust name and in order to do this, you will need an EIN which can be obtained at IRS.gov. It does not take long to do but be sure to leave yourself enough time to get the bank account set up before closing. At least a week or two ahead of your closing, but it can be a hectic time so before listing the property would be even better.
This post, nor any information on this website, constitutes legal advice. Please consult with an attorney for any issue or situation which may have legal implications.